July 23, 2012

Corporations Dodge Taxes

Conservatives incessantly complain about how the United States has the highest corporate tax rate in the world. Rate, maybe. Taxes, not at all. This was clarified again when Susan Ford, a senior executive Corning Inc., testified last week to the House Ways and Means Committee in its ongoing hearing on “tax reform and the U.S. manufacturing sector.”

During 2008-2011, Corning Inc. earned $3 billion dollars. During that time period, it paid $0 in U.S. income tax. During that same time period, it also received a $4 million tax refund. Ford’s testimony was that the company paid an effective U.S. tax rate of 36 percent and a foreign tax rate of 17 percent. The 36 percent figure (probably highly inflated) comes from taxes on profits earned overseas that haven’t yet been paid and won’t be unless the company decides to bring the money back to the United States. “Effective tax rate” subtracts the taxes that are paid to a foreign country. So Ford is saying that Corning paid all these taxes (if indeed they did!) to a foreign country with nothing left over for the United States.

In fact, Corning paid -0.2 percent taxes. And this company is not alone in its ability to pay negative federal income taxes: 26 of 30 major businesses begging to have their taxes lowered also paid negative federal income tax rates. The U.S. could make a fortune if the government eliminated tax havens and loopholes.

The “effective tax rate” for corporations in 2011 was 12.1 percent, a 40-year low and far below the rate for middle-class people in this country. Real wages for 98 percent of the people in the United States fell 2 percent in 2011 while employees worked longer hours without raises, took pay cuts, and gave up benefits just to keep their jobs. The system that Ford testified in favor of would not only allow huge corporations to take more money from the taxpayers but also move another 800,000 jobs offshore from the United States.

Those with the most money are able to evade taxes. They are the ones who control government. Mitt Romney is a prime example of this problem.

The other point is that tax cuts result in job losses, not gains. Higher taxes during the 1990s produced more employment; the Bush tax cuts in the 2000s started a decline in employment which hasn’t been overcome because the tax cuts continued in 2010. If the United States doesn’t increase taxes for the wealthy and deadbeat corporations, it will continue to punish the people without jobs.